Larkspur Industries acquired two copyrights during 2020.
One copyright related to a textbook that was developed internally at a cost of $9,600. This textbook is estimated to have a useful life of 3 years from September 1, 2020, the date it was published.
The second copyright (a history research textbook) was purchased from University Press on December 1, 2020, for $34,000. This textbook has an indefinite useful life.
How should these two copyrights be reported on Larkspur ’s balance sheet as of December 31, 2020?

1st copyright will not be reported on balance sheet.

2nd copyright will be reported on balance sheet.

Dr Copyright (Intangible Asset) $34,000

Cr Cash $34,000

Explanation:

1st Copyright

If an intangible asset is internally generated, none of its costs are capitalized.

2nd Copyright

Acquired copyright is reported on balance sheet as an intangible asset. Company may include only outright purchase costs in the acquisition cost of an intangible asset; the acquisition cost does not include cost of internal development.

Only recognized intangible assets with finite useful lives are amortized. Recognized intangible assets having indefinite useful lives are not amortized.

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